Getting the UK's house in order

New analysis of the UK’s Company Register shows the
Government is failing to act on deep flaws in its implementation, which is
enabling UK companies to be used by money launderers, the corrupt and other
criminals to store their ill-gotten cash.

Our research shows how a failure by Companies House
to check company information or enforce rules means criminals can exploit
loopholes and submit false information. We even found an address in London
where at least two company service providers appear to host a number of
companies apparently controlled by children under the age of two, who not only
had access to the profits of the company, but also the “right to appoint directors”
and voting rights.

Key findings

Using the open data nature of the register, Global
Witness analysis found:

336,224
companies simply say they have no beneficial owner*

6,711
companies are controlled by a beneficial owner who themselves control over
100 companies, suggesting likely nominees

487
companies are part of circular ownership structures

8,872
companies name another foreign company as their ultimate owners which is
unlikely to be listed on a stock exchange.

* This is
legal, if no individual owns more than 25% of the company

Our analysis comes after a series of new money
laundering scandals involving UK companies and partnerships, including from
Russia via Danske Bank in Estonia and the Troika Laundromat.

Recommendations

The Government must give Companies House the
powers and resources to carry out comprehensive verification of all the
information it receives and holds on companies, amending UK legislation
accordingly.

The Government must start enforcing its rules
and apply sanctions for those that maliciously break the rules - including
fines and prison sentences.

Companies House
should take a proactive approach to tackling money laundering and other crimes
by analysing the company information it holds, identifying suspicious companies
and ensuring they are investigated.